Richard Branson: Business Stripped Bare

These values do not come cheap. These values must be paid for. Our Virgin Mobile business in America still holds the record as the fastest company to generate revenues of over a billion dollars. That’s faster than Microsoft, Google and Amazon. We’ve created more business multimillionaires than any other private company in Europe — and we’re among the top twenty in the United States. Business requires astute decision-making and leadership. It requires discipline and innovation. It also needs attitude, a good sense of humour and, dare I say it, luck.

We turn entrepreneurial ideas into outstanding businesses. We receive hundreds of business ideas every month, often directly via our website. We employ a gatekeeper — a corporate development assistant — whose job it is to record, log and classify all ideas as they arrive. She then passes them on to our experts. They read through and research the best of them. A tiny number are passed to our investment professionals — whole teams of them, working in London, Switzerland, New York, Shanghai and Sydney — and they are more forensic about business than the detectives on Crime Scene Investigation .

What if we like your idea? If you’ve seen the BBC’s Dragons’ Den — or American Inventor , its US equivalent — then you know what’s coming. We will strip you bare.

We normally invite people to come along to Virgin’s Investment Advisory Committee and present their plans in London, New York or Geneva; and sometimes in the Far East, in Japan or China. At these weekly meetings we have a team of six Virgin managers we can pull in to help examine projects. So that our own vested interests don’t blind us to new opportunities, none of the committee runs a Virgin business on a day-to-day basis — but they work closely with all of the top people who run our businesses and bounce ideas off them all the time.

Our global chief executive, Stephen Murphy, who operates in Switzerland, and Gordon McCallum (our UK chief executive), ask some very tough questions. They will rigorously push and pull your business plan about to see if there is a profitable business underneath. Facing the committee can be daunting for the uninitiated — and you are normally expected to be well prepared, with the facts at your fingertips. But these people don’t bite, and (unlike some of their television counterparts) they are not remotely rude. They can ask for more meetings so that deeper questions can be answered. Often the committee meets several times before a final decision is given. We look at spending plans, income forecasts, the marketing budget, and when the company is likely to break even. We work out our exit strategy — will it be a sale, or a flotation on a stock market? And, above all, we look at the key managers who will be running the business. This is the holy grail for us, because it’s the people that make a great business idea work.

More often than not, after all things are considered, they’ll recommend that we don’t invest in your business. The possible reasons for this are so many and various, they’re not even worth agonising over. Dust yourself off. Learn what lessons you can. Make your next call.

The Virgin team acts just like any other commercial venture capitalist organisation. It assesses your potential, whether it fits with the group’s ambitions and strategy, and of course brand values, and what the possible returns and profits will be. Then it works out what kind of stake the Virgin Group should take. In return, the new company gets the full range of Virgin’s expertise — and I’ll agree to help raise the profile, make key introductions and offer any advice that I can.

The Investment Advisory Committee are my trusted lieutenants and they know almost everything there is to know about the Virgin global business. I’m rarely at their meetings — the team don’t like my interruptions and interference. I know this because they have a nickname for me. They call me Dr Yes — a parody of the wonderful James Bond movie Dr No .

If I like your idea, but the investment committee have concerns, then I usually ask them to go and find solutions to the problems they’ve identified. I prod these people constantly. I remember, before we developed our mobile phone business, I was on to them every week saying: ‘Why aren’t we in this yet?’ The committee didn’t want to launch Virgin Blue, either, but in the end they saw sense!

But, you see, I have an ace up my sleeve. If I believe in your business idea, I can be quite persuasive in getting people to accept my point of view. I never do this lightly — but, as I’ve said, usually go with my gut instinct, disregarding whole volumes of painstaking research. I would love to be able to tell you that every ace I’ve played has turned out to be a Virgin Blue or a Virgin Mobile. But I can’t — which is why I make my senior colleagues at Virgin very, very nervous!

Should we decide to go ahead with you, we sign up as branded venture capitalists (occasionally, as unbranded investors), take a stake in the company, and then look for a return on that investment after about two to five years.

And that, the cynics will say, is that. Of course, businesses also have a duty of care for the health and well-being of their people (and you will hear what we have done in South Africa for our staff with HIV/Aids). Beyond that, though, business is ‘just business’: a scramble for profit. Right?

Well, that might describe crime; it certainly doesn’t describe business.

Ethics aren’t just important in business. They are the whole point of business . We’re in business to make things. And when you decide what to make, that, right there, is an ethical decision.

The more successful you get, the bigger and harder the ethical questions become. I spent the first half of my career creating businesses that we could be proud of, that paid the bills and ensured that the Virgin Group was strong and survived. It has been our aim to establish Virgin as the ‘Most Respected Brand in the World’. It has to be one that is trusted in each and every marketplace. I think once the Virgin Galactic space programme starts, we have a chance of being the most respected brand in space too!

On the back of that work, I’ve built the second half of my career, creating what I call ‘war rooms’, to tackle environmental problems and disease, bringing together global leaders to form the Elders — compassionate people who wield their huge influence for the good of humanity. The entrepreneurial skills we use to get these projects up and running are the same ones we used to create Virgin Records and Virgin Atlantic. Why would they be any different? Business is about getting things done. No, scratch that: business is about getting better things done (whilst building profits) and setting up a not-for-profit ‘social’ business is not really any different to setting up a commercial business.

Make no mistake: being better is hard to do, and only gets harder the bigger you get. If you’ve got a brand with 300 companies, you’ve got to be diligent and make sure that nobody makes a mistake that damages the business’s reputation. That means no bribes, no backhanders and no hidden payments to oil the wheels of commerce. It means treating people fairly and equitably.

Now the stakes are even higher. The threat of climate change is the biggest challenge we face as a planet. Virgin is, among many other things, a transportation group. A rail travel company. An air travel company. With a space tourist start-up. So we’re making things worse — right?

Well. We cannot unmake air travel — or space travel for that matter. No one in business can unmake anything, any more than a band can unmake a song. Can you unmake your hangover? Your indigestion? Your children? Your last week’s work? No. Welcome, then, to the first law of entrepreneurial business: there is no reverse gear on this thing.